The original version of the Servicemembers Civil Relief Act was enacted in 1940. Since then, Congress has amended it a number of times. But the federal law protecting those on active duty military service is still rife with ambiguity. The language is sometimes broad and open to several interpretations, which is why sophisticated users set up processes that make complying with the SCRA easier.
What’s alarming to lending institutions — and understandably so — is the degree to which they are held liable for compliance with this law and the penalties they may have to pay absent real, concrete guidance from the government.
The government created the SCRA to protect those on active duty military service — including the Army, Navy, Air Force, Marines and in some circumstances the National Guard — serving our country. Its intention is to relieve them of the worry of whether bills are being paid at home, so they can concentrate on their jobs.
Times — And the SCRA — Change
But over the years, life, finances and how we manage them has changed significantly. When Congress first enacted the law, there was no internet, no Freddie Mac and no student loans. The bills we pay and the manner in which we pay them has evolved since then.
Consequently, it has become common for a lending or financial institution to misinterpret the SCRA, and the United States Department of Justice is not particularly forgiving. The DOJ has filed numerous lawsuits over the past few years against lending and financial institutions for noncompliance with the SCRA. As you may guess, any pleas of ignorance of the law have fallen on deaf ears.
Consent Orders in SCRA Cases
Studying the intricacies of the latest version of the SCRA will not necessarily provide answers to your questions. One slip in the process of eviction, foreclosure, repossession, interest rate adjustment, fees and charges could find you paying out in the thousands or even millions.
Most lending institutions are aware that they should check a client’s military status to see if they are on active duty before seeking any type of judgment or other enforcement action against them without a court order. But even this isn’t always enough when you’re dealing with clients in military service. Especially if you have incorrect, incomplete or missing information, you could get erroneous results. In fact, the consent orders promote the idea that lenders and services be proactive about scrubbing data to identify service members and offer them the protections to which they may be entitled.
Using a service like the Servicemembers Civil Relief Act Centralized Verification Service can help with SCRA compliance. We can provide you with accurate, guaranteed results, usually within 24 hours. And you don’t even need a Social Security number.
SCRA Compliance Is Essential
But one check is often insufficient. Experts advising lenders about SCRA compliance recommend several checks along the process. When you request a status check, your results will be for a certain date, not a range or a period of military service, so you must keep that in mind when making active duty checks.
Lenders know only too well how long paperwork and processes take. If your client joins the military or goes on active duty in the meantime and you unknowingly proceed with your case, you may end up paying a steep price. You should make multiple checks at intervals throughout the process.
The best insurance against SCRA violations is to set up a department within your company or institution to address this issue. This does not have to be their sole focus. However, you should task the group with making active duty status checks, tracking progress and cross-checking client accounts. If, for instance, a service member requests a lower interest rate on a credit card because they have been deployed, your department should automatically check to see if this servicemember has other accounts with your organization, such as a mortgage or auto loan, and extend these protections automatically.
The best way to stay in compliance with the SCRA is to use the SCRACVS, a trusted service, to make checks frequently.